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TRACKING THE RECESSION IN REAL-TIME

Digital Revolution Brief 6 29 2020 ThumbnailAfter past recessions, it took months—if not years—for economists to gather the data necessary to understand the depth and magnitude of the economic contraction. Even with the lag, most traditional economic surveys conducted by the government (i.e. GDP, Consumer Spending) lacked the necessary granularity to understand the people, businesses, and cities most impacted by the recession.

In the era of big data, economists are turning to the private sector for help. Opportunity Insights, a nonpartisan research and policy institute, recently partnered with a number of leading private companies (credit card processors, payroll firms) to create a real-time Economic Tracker. Anonymized data is aggregated to create timely estimates for employment rates, consumer spending, and job postings. The size of the data set allows for comparison of trends by location, industry, or income group.

Harvard professor Raj Chetty and his team used this new data set to analyze the impact of COVID-19 on spending and employment.

Click here to read Allegiant's Digital Revolution Brief by Senior Research Analyst Will Geisdorf, CMT, which examines a few of the high-level takeaways.

 



Our own Senior Research Analyst Will Geisdorf, CMT, was recently quoted in a MarketWatch article. Here's an excerpt of the piece published on June 27, 2020: 

What’s driving the stock market?

Investors have wrestled with rising daily rates of new U.S. coronavirus cases all week, and that again cast a pall over the stock market on Friday.

U.S. states saw a single-day record rise of 37,000 in infections on Thursday, led by Florida, Texas, California and Arizona, surpassing the 36,188 level from April 24, according to analysis of data from Bloomberg.

That case count “blew out any of the previous records,” said Will Geisdorf, senior research analyst with Sarasota, Fl-based Allegiant Private Advisors. “I think the markets are looking at that and starting to discount the potential for a V-shaped recovery.”

As evidence continues to mount that consumers are losing confidence, pressure will mount on policymakers to deliver another round of fiscal stimulus, Geisdorf said in an interview. “That’s what markets need to get out of this period of consolidation and volatility and continue higher. We’ve had the best 50-day period in market history. Some sort of correction was needed to relieve excessive optimism.”

Governors in Texas and Florida ordered all bars to re-close on Friday, making the states the first to reverse some reopening measures after months of lockdowns. Texas reported 6,426 new coronavirus cases Thursday, according to Johns Hopkins University data, and Florida reported over 8,900.

Local COVID Impact Brief 6 24 2020 thumbnailEvery day the world wakes up to updated stats on the spreading pandemic.

Much of the data highlights big picture national level data. While this is important, COVID-19 is very much a local issue. An outbreak in one part of the country may not have much of a direct impact on you if your local area is performing well and vice versa. 

Click here to read our insights about the situation locally in Florida and the Sarasota area in a new brief

Key takeaways include: 

  • As the U.S. flattened the COVID-19 curve, Florida began loosening social distancing restrictions.
  • Positive COVID tests are increasing in Florida. Many cases are concentrated in the southeast Florida region and larger cities.
  • Worsening trends could negatively impact the economic recovery. A lot will depend on how well the medical system can absorb all the new cases.

Existing home sales missed expectations in May, reflecting a lack of activity during coronavirus induced lockdowns. Even with the miss, there is good news for the housing market: 30-year mortgage rates are near historic lows. The chart above shows the close relationship between existing home sales and 30-year mortgage rates. Under normal circumstances as mortgage rates decline, existing home sales rise. This is a positive backdrop for the housing market in the months to come, particularly if mortgage rates trend lower. For those looking to buy, now may be a great time to lock-in low interest rates.

Existing Home Sales Growth is Set to Improve 6 23 20

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Allegiant Private Advisors has been recognized on Accounting Today’s “Wealth Magnets” annual list as a Top Firm by Assets Under Management for 2020. Our independent firm offering fiduciary-level financial planning and investment advisory services earned a spot on the 2020 list based on Allegiant’s $789 million in assets under management. For the 14th annual ranking, Accounting Today received submissions from firms across the country; Allegiant is the only Sarasota-based firm included and one of three in Florida recognized in 2020. 

“Our team is honored to be recognized by Accounting Today because we proudly ‘speak CPA’ at Allegiant. We regularly liaison with our clients’ complete team of advisors including accountants, attorneys and other trusted professionals focused on protecting and preserving assets,” explained Allegiant Private Advisors President Benjamin W. Jones, CFP®, AIF®. “In recent months, this means many collaborative online meetings with clients as we evaluate and advise on tax saving strategies and help clients navigate provisions of the CARES Act including the Paycheck Protection Program.”

Retail sales became the latest major economic statistic to join the “bad but improving” camp. Although down slightly over the past year, retail sales made a strong recovery on a month-over-month basis. The recovery was broad-based with every major sector growing over the past month, while discretionary sectors made the biggest improvements. These massive monthly swings will likely stabilize as direct to consumer stimulus fades and pent-up demand dissipates. As we have said before, consumers’ willingness and ability to spend will be a major determinant of how the economic recovery takes shape on a broad scale.

Retail Sales Data Joins the Bad But Improving Quadrant 6 17 20

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Allegiant's President and Chief Investment Officer Benjamin W. Jones, CFP®, AIF®, offers insights about current circumstances surrounding the coronavirus pandemic in our latest brief. Please click here to read or download the full report

KEY TAKEAWAYS:

  • As the U.S. flattened the COVID-19 curve, states began loosening social distancing restrictions.
  • Statistical trends are worsening and half of U.S. states are currently experiencing accelerating COVID-19 case numbers.
  • Worsening trends could negatively impact the economic recovery. A lot will depend on how well the medical system can absorb all the new cases.

Allegiant's Investment Research Team has created a new Chart Book with updated easier-to-read graphics and a fresh glance at the most pertinent information we are examining today. Click here to read the June 2020 Chart Book

Our Director of Portfolio Management & Principal Luke Nicholas, CFA, CFP®, and Senior Research Analyst Will Geisdorf, CMT, also explain this month's data is a new video:

No two recessions are the same - that has never been more true than today. The U.S. has not experienced an economic decline like the one that started in March since the Great Depression. Even more, the sheer speed of the decline is unparalleled. This might seem like a negative, but it is actually a positive. The quicker the decline, the quicker the recovery can begin. 

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Allegiant's President and Chief Investment Officer Benjamin W. Jones, CFP®, AIF®, offers insights about the current state of employment in our latest brief. Please click here to read or download the full report

KEY TAKEAWAYS:

  • The speed and magnitude of recent job losses dwarf experiences in past recessions.
  • Job losses have hit some sectors much harder than others. Lower income workers have been most impacted.
  • A vast majority of the recently unemployed workers are classified as temporarily unemployed instead of permanently unemployed, leaving hope for a swift recovery.

Ben also shared his perspective about the May 2020 Jobs Report released on June 5, 2020, in a new video: